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The Alt Ucits sectors with biggest H1 inflows

Citywire Investment Research looks at where alts investors are investing and the managers hoovering up assets.

An alternative angle

Alternative Ucits, the hedge fund-like strategies, continue to find favour among investors with the lure of these strategies aiming to minimise losses on market downside but also deliver returns above cash with limited volatility.

In terms of average manager performance, the best performing sectors over the past year are Alternative Ucits – Long/Short Equity, Alternative Ucits – Convertibles and Alternative Ucits – Fund of Funds. But has this performance translated into flows into these sectors?

In this gallery, Citywire Investment Research shines a light on the top three sectors taking in the most net new money in the first half of this year and highlight the top three managers within these sectors in terms of flows.

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Top three sectors

Out of the 13 Alt Ucits sectors covered by Citywire, the one accruing the most net inflows over the past six months is Alternative Ucits – Multi Strategy, which took in €4.76 billion. This sector remains popular among investors and accounts for the overall top 5% of all sectors covered by Citywire for taking in the most inflows in the Global ex US peer group.

In second position is Alternative Ucits – Bond Strategies, which took in €3.4 billion of net inflows. Not following too far behind is Alternative Ucits – Fund of Funds, which has taken in estimated net inflows of €3.26 billion in the first half of this year.

Over the next few slides we take a closer look at the managers who have taken in the most net inflows in each of these three sectors.

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Alternative UCITS - Fund of Funds

Also proving a popular sector within the Alternative Ucits asset class is Fund of Funds which makes it in third place for sector flows in this asset class.

The main takers of net inflows over the past six months are Alvaro Martín Sauto and César Gil Cano, managers of the Bankia Soy Asi Cauto fund. This fund is only registered for sale in Spain but has taken in a handsome sum of net inflows of €1.13 billion from Spanish investors.

The popularity of Bankia does not stop there as another of its funds, the Bankia Evolucion Prudente fund, also managed by Sauto and Cano, along with Jesús Borrás Tortajada and Pablo Rodríguez Martos, comes in at third position for net inflows in the Alternative Ucits – Fund of Funds sector.

Sitting between the two Bankia funds in second position for net inflows are Andrew Harmstone and Manfred Hui, who co-run the Morgan Stanley Global Balanced Risk Control fund, which is more widely available for sale across Europe. Harmstone and Hui invest in ETFs, futures and investment funds. At the end of June had 76% invested in equity assets and 22.5% invested in fixed income assets.

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Alternative UCITS - Bond Strategies

The Alternative Ucits – Bond Strategies sector has seen a few volatile years in terms of flows. In 2015 and 2016, these types of strategies fell out of favour making this sector one of the worst for net outflows during this period, placing it in the bottom 10% for flows.

However the tide has now turned, with money coming in strong in this sector in the first half of 2017 as investors are once again moving back into fixed income products. This Alternative Ucits – Bond Strategies is now the second most popular sector in this asset class for the first half of this year.

The managers benefitting most from this reversal in fortune are Johan Sjogren, managers of the BSF Fixed Income Strategy fund. This strategy received €0.87 billion in net inflows over the past six months.

Not far behind for net inflows are S. Kenneth Leech and Prashant Chandran, managers of the Legg Mason WA Macro Opportunities Bd fund. At the end of June they had 52.5% invested in emerging markets and 46% in foreign exchange.

In third position is Barrie Whitman and his Threadneedle Credit Opportunities fund. He’s taken in a respectable €0.46 billion over the first half of the year. He focuses on high yield and investment grade credit markets and also has the flexibility to move into other areas of the fixed income market depending on prevailing market conditions. He also uses derivative and leverages investments in order to generate returns from both rising and falling markets.

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Alt Ucits – Multi Strategy

Multi strategies continue to dominate flows with the allure of providing diversification across all asset classes proving popular. Flows into the sector remain strong with a few strategies taking in the most net assets.

In first position for net inflows is Klaus Kaldemorgan, who has run the Deutsche Concept Kaldemorgen fund since May 2011. Kaldemorgen targets growth-orientated investments and is largely led by the overall economic cycle. He uses long and synthetic short positions profiting from over- and under-valued asset classes.

On his heels are Invesco trio David Millar, David Jubb and Richard Batty, who run the Invesco Global Targeted Returns fund. This fund has taken in just over €1 billion over the past six months. At the end of June they added some protection to its US dollar against the Canadian dollar by buying put options which will cushion the call if the US dollar falls sharply.

In third position is Roberto Gallo, who runs the Pioneer Target Controllo fund. He has managed this fund since January 2009 and over the past six months flows have been strong, mainly coming in from Italian investors. At the end of May, Gallo had 31% invested in the US.

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Related Fund Managers

Klaus Kaldemorgen
Klaus Kaldemorgen
14/70 in Alternative UCITS - Multi Strategy (Performance over 3 years) Average Total Return: 11.66%
David Millar
David Millar
40/70 in Alternative UCITS - Multi Strategy (Performance over 3 years) Average Total Return: 4.11%
Alvaro Martín Sauto
Alvaro Martín Sauto
7/36 in Alternative UCITS - Fund of Funds (Performance over 3 years) Average Total Return: 6.42%
César Gil Cano
César Gil Cano
8/36 in Alternative UCITS - Fund of Funds (Performance over 3 years) Average Total Return: 6.42%
Jesús Borrás Tortajada
Jesús Borrás Tortajada
21/36 in Alternative UCITS - Fund of Funds (Performance over 3 years) Average Total Return: 0.98%
Pablo Rodríguez Martos
Pablo Rodríguez Martos
14/50 in Alternative UCITS - Fund of Funds (Performance over 1 year) Average Total Return: 4.02%
S. Kenneth Leech
S. Kenneth Leech
3/72 in Alternative UCITS - Bond Strategies (Performance over 3 years) Average Total Return: 19.06%
Prashant Chandran
Prashant Chandran
5/72 in Alternative UCITS - Bond Strategies (Performance over 3 years) Average Total Return: 14.66%
Curtis Arledge
Curtis Arledge
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